Tax Perk to Boost Investment May Work—For Small Businesses

Critics of a tax policy meant to spark capital spending and hiring say it only rewards investments companies would make anyway. That may be the case for big public corporations, but not for smaller, private businesses.

The policy, known as expensing or bonus depreciation, allows for a full or larger upfront write-off of capital expenses rather than a series of piecemeal tax breaks over time.

Public corporations don’t report the tax perk in their financial statements, however, as it’s a matter of when and not if they’ll get deductions. They can also use access to public markets to raise ...